Blockchain forensics is the trusted informant in crypto crime scene investigation
The seizure by the U.S. Department of Justice of $3.6 billion worth of Bitcoin (BTC) lost during the 2016 hack of Bitfinex’s cryptocurrency exchange has all the ingredients of a Hollywood film — eye-popping sums, colorful protagonists and crypto cloak-and-dagger — so much so that Netflix has already commissioned a docuseries.
But, who are the unsung heroes in this action-packed thriller? Federal investigators from multiple agencies including the new National Cryptocurrency Enforcement Team have painstakingly followed the money trail to assemble the case. The Feds also seized the Colonial Pipeline ransoms paid in crypto, making headlines last year. The Internal Revenue Service (IRS) seized $3.5 billion worth of crypto in 2021 in non-tax investigations, according to the recently released Chainalysis cryptocrime 2022 report.
The trends point to the diminishing ability of nefarious criminals and terrorists to use cryptocurrencies as safe havens to stash their ill-gotten gains, illicit profits, donations and funding away from law enforcement officials. For example, the Bitfinex hackers are reported to have moved a small portion of Bitcoin to darknet exchange Alphabay and from there to regular crypto exchanges. This is one of the leads that the Feds used to apprehend the defendants.
Related: How will DOJ’s new crypto enforcement team change the game for industry players, good and bad?
Regulators and law enforcement agencies in a select few countries have really upped the ante on blockchain forensics. Although initially lost at sea, some G-men and women have honed the playbook on the search and seizure of assets, prosecution in courts and disposal of seized digital currency after winning the case. Each of these specific steps
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